CYPRUS – RUSSIAN DOUBLE TAX TREATY

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CYPRUS – RUSSIAN DOUBLE TAX TREATY

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(ARTICLE 13 – ‘Capital Gains’ UPDATE) 

Capital gains tax on Cyprus shares holding immovable property in Russia has been postponed

UPDATE 29 DECEMBER 2016 

In an announcement by the Cyprus ministry of finance on 29 December 2016 it is stated that an agreement has been reached between the Russian Authorities and the Cyprus authorities for postponing the application of the Protocol amending Article 13 of the Cyprus – Russia double tax treaty (as amended in 2010) (the “Treaty”).

In accordance to Article 13 ‘Capital Gains’ of the Treaty the gains on sale of shares of a Cyprus company deriving more than 50% of their value from immovable property situated in Russia would be taxed in Russian Federation rather than Cyprus.  This clause was set to be effective from 1 January 2017.

Based, however, on the agreement reached on 29 December 2016 the application of Article 13 to the Treaty has been postponed and an additional Protocol to the Treaty will be released shortly providing that the application of the revised provisions of the Treaty will not apply until similar provisions are introduced in other bilateral double tax treaties between the Russian Federation and other European countries.

It should be noted that Cyprus does not levy any taxes on the sale of shares or similar titles.

 

 ANNOUNCEMENT PUBLISHED BY THE CYPRUS MINISTRY OF FINANCE

Announcement

Protocol amending Article 13 “Capital Gains” of the Agreement between 
the Government of the Republic of Cyprus and the Government of the 
Russian Federation for the Avoidance of Double Taxation with respect to
taxes on income and on capital.

The Ministry of Finance announces that an agreement has been reached between the Russian Authorities and the Authorities of Cyprus for postponing the application of the Protocol amending Article 13 of the Agreement between the Government of the Republic of Cyprus and the Government of the Russian Federation for the Avoidance of Double Taxation with respect to taxes on income and on capital, which was signed on October 7th , 2010.

In parallel, an additional Protocol is being finalised, providing for the application of the revised provisions of Article 13 of the said Agreement, until similar provisions are introduced in other bilateral Agreements for the Avoidance of Double Taxation between the Russian Federation and other European countries.

December 29th, 2016
MINISTRY OF FINANCE NICOSIA

HOW LSTS CAN ASSIST YOU

LSTS may assist in:

i.) The establishment of a suitable Cypriot structure for holding properties in Russia.

ii.) Provide further guidance on the new provisions to the new double tax treaty.

iii.) Keep you updated on the developments on the matter. 


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